The orphan receptor SHP is an unusual member of the nuclear superfamily that lacks a DNA binding domain. It interacts functionally with many other superfamily members, including both conventional receptors and orphans. It generally inhibits transactivation, but can be stimulatory in specific circumstances. Insight into the potential function of SHP was recently provided by exciting results demonstrating that an unusual group of Japanese patients with mature onset diabetes of the young (MODY) are heterozygous for SHP gene mutations. Particularly since one of the five known MODY genes encodes the orphan receptor HNF4, which a specific inhibitory target of SHP, it is hypothesized that SHP acts with HNF4 or potentially other transcription factors to regulate the normal glucose response of pancreatic beta cells. More broadly, HNF4 and other potential SHP targets have profoundly important developmental functions, and it is hypothesized that complete loss of SHP function will also have important consequences for development. Three specific aims are proposed to test these hypotheses. The first is to characterize in detail the interaction between SHP and HNF4, and to determine whether SHP also interactions functionally with the three other MODY transcription factors. The second is to determine the consequences of the loss of SHP function in the embryoid body model of endoderm development, particularly its effects on the HNF4/HNF1 regulatory hierarchy. The third is to inactive the SHP gene in mice by knocking in the beta-galactosidase gene, and also to determine whether SHP acts positively or negatively in the pancreas and other tissues using a novel transgenic activity trap. These studies will provide novel insights into the role of SHP in both metabolic and developmental regulatory pathways.